Financing

Minnesota restaurants will soon have to start disclosing total prices, service fees included

A law enacted this week bans hidden fees but allows restaurants to continue levying surcharges if customers get a heads-up and the money goes to employees.
The law would forbid sudden add-ons. | Photo: Shutterstock

Minnesota has passed a law requiring restaurants to inform customers of what they’ll be charged in full before they order, with service fees and other surcharges figuring into the preview.

The complete price would similarly have to be displayed in any advertisements for menu items.

The law allows food deliverers to show unadjusted menu prices on their apps or websites provided they present the final cost before the order is placed, with any flat delivery fee or percentage charge factored into the total.

The bill, which takes effect Jan. 1, specifies that mandatory gratuities can still be added to restaurant bills, but only if all the proceeds go to employees and patrons are clearly advised of the surcharge before they order.

Restaurants can depart from posted or advertised prices, but only if they charge less.

The bill signed into law this week by Gov. Tim Walz is intended to protect consumers from so-called junk fees, the surprise charges that are sprung on consumers after committing to a purchase. It applies not only to restaurants and delivery services but to a host of other businesses, including hotels, concert ticket sellers and cable TV providers.

In that respect, it parallels a law that takes effect in California on July 1.

However, the language of the Minnesota bill is murkier on exactly how restaurants will need to comply. It indicates in parts that customers will have to be presented with the single amount they’d be charged, fees and surcharges included. But other sections suggest patrons need merely be shown what would go into their bill—the cost of food and beverage, plus whatever flat fee or percent surcharges would be added on.

Guidance has yet to be issued by state officials, and the means of enforcement have not been revealed. Ditto for the penalties.

The restaurant industry had vehemently opposed the law, arguing that customers are typically alerted ahead of time when service fees or other surcharges now common in the business are added to their tabs. The reasons for those extras are also often revealed.

For those reasons, groups like the state restaurant association Hospitality Minnesota has repeatedly insisted that restaurant surcharges are not junk fees.

Similar legislation is technically still pending in Illinois, but that state’s legislative session ends Friday, signaling the bill will either be kicked into the next session or allowed to die.

A nationwide ban on restaurant surcharges and add-on fees has been proposed by the Federal Trade Commission as a way of promoting truth in advertising. The regulatory agency has yet to issue a final regulation.

Members help make our journalism possible. Become a Restaurant Business member today and unlock exclusive benefits, including unlimited access to all of our content. Sign up here.

Multimedia

Exclusive Content

Financing

Saladworks-parent WOWorks is shopping for new brands to buy

The platform company is almost finished assimilating its existing six brands. Now it's time to add to the family, said CEO Kelly Roddy.

Financing

2 more reminders that the restaurant business is risky

The Bottom Line: Franchising is no less risky than opening your own restaurant. Just ask former NFL player David Tyree and the former president of McDonald's Mexico.

Marketing

There's plenty happening at the high end of the pricing barbell, too

Reality Check: Decadent meal choices are also proliferating, for a lot more than $5.

Trending

More from our partners